Just over a year ago, Xcel Energy’s Colorado operating company began a discrete resource acquisition process with a stipulation among 15 parties (including Vote Solar) to retire two units at the Comanche Station near Pueblo, i.e. 660 MW of coal generation, about 10 years early and to replace the capacity with a combination of solar, wind and natural gas generation. This process was proposed to be folded into its ongoing Electric Resource Plan at the Public Utilities Commission.

xcel coal plant

A key part of the proposal embodied in the stipulation was to assure that rates would not be affected by the accelerated recovery of the remaining capital costs of the two coal units. 

Enter the RESA. As a result of the rapidly declining cost of solar and wind resources, the utility’s Renewable Energy Standard Adjustment (or RESA) – the mechanism that collects funds from the general body of ratepayers to support the state’s RPS – was projected to have an increasingly positive balance. The deal struck in the stipulation was to reduce the 2% RESA rider to 1% and use the reduction to establish a separate rider that would collect the costs of accelerated depreciation of the coal units. Once these costs were recovered by roughly 2028, the Commission would determine whether to return the RESA to 2%.

We argued that there was much good work yet to be done using RESA funds.  For instance, noting that approximately 20% of Colorado households are low-income and have contributed to the RESA fund for some twelve years, yet they have largely been unable to reduce their energy burden through the use of distributed solar resources. Now that most homeowners are able to install rooftop solar without the support of a subsidy from the utility, we suggested that a significant portion of the funds collected through the RESA be dedicated to low-income rooftop solar and community solar gardens programs in rough proportion to the single family and multi-family housing populations. This need for economic support of low-income customers formed a key basis for recommending the RESA automatically return to 2% upon collection of the coal costs. In responsive testimony, Xcel Energy adopted this position as well.

Long story short, the wind and solar resources that Xcel received through a bidding process were among the lowest ever seen in the country, with the median prices coming in for wind at about $20/MWh, solar at $30/MWh and solar plus storage at $36/MWh.  Ultimately, the recommended “Preferred” plan included over 1,100 MW of wind, over 700 MW of solar, 275 MW of battery storage and 383 MW of gas.  These great prices mean lower costs for everyone, much less carbon in the air, and more wind and solar jobs. 

This week, the Commission voted to approve the Preferred CEP, and the accelerated depreciation/RESA tradeoff, but did not agree to automatically restore the RESA to 2%.  While this result is disappointing, the larger context of shutting down 660 MW of coal is a big victory and sets a model for future cleanup of existing fossil powered energy systems. And by 2028, it will be a very different world in which to determine how we assure equity and access.

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